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Amazon is facing a lawsuit accusing it of misleading Prime subscribers by charging them an additional fee to stream movies and TV shows without ads.
A proposed class action lawsuit, filed on Friday in California federal court, claims breach of contract and violations of state consumer protection laws on behalf of users who saw the terms of their subscriptions with Amazon change when it pivoted to making its ad tier the default for its over one hundred million subscribers.
In 2023, Amazon, which declined to comment, announced plans to turn on ads for all Prime Video viewers. The platform last month rolled out the change, instantly turning the service into a streaming-ad juggernaut and the largest ad-supported subscription streamer. Users must pay an additional $2.99 per month to watch without ads.
But when Amazon altered its terms, users who had signed up for annual subscriptions were also impacted. They allege the change is deceptive.
“Subscribers must now pay extra to get something they already paid for,” the complaint states.
In addition to being “unfair,” the suit alleges that Amazon illegally benefited by advertising Prime Video as “commercial-free” for years prior to launching its ad-supported tier, which “harms both consumers and honest competition,” according to the complaint.
The proposed class action seeks at least $5 million and a court order barring Amazon from engaging in further deceptive conduct on behalf of users who subscribed to Prime prior to Dec. 28, 2023. It brings claims for breach of contract, false advertising and unfair competition, among other alleged violations of consumer protection laws in California and Washington.
Last year, the Federal Trade Commission sued the tech giant for allegedly duping consumers into signing up for its Prime service and then impeding them from canceling their subscriptions. The suit argued Amazon employs a “manipulative” and “coercive” interface to trick users into enrolling in automatically renewing subscriptions. It also alleged that many subscribers intended to sign up solely for Prime Video, which is a lower-cost option.
Prime is considered a vital part of Amazon’s retail dominance because it keeps users locked into the company’s marketplace by offering them perks, including access to Prime Video, according to the FTC.